It says to "Reach a given true (progression to next level does not apply) average skill level". I'm an idiot and don't know what this means exactly. I'm pretty sure it means get level 5 on every non-cosmetic skill and boosting the average by getting skills above 5 isn't allowed. Can confirm this for me?

It means have an average skill level of 5 within the 8 skills (Cosmetic skills + Dungeoneering don't count so only Farming, Mining, Foraging, Fishing, Enchanting, Taming, Alchemy, and Combat). Since there are 8 skills this could also be considered get 40 levels of any combination of skills. So getting combat 40 (though impractical) would be valid to get an average skill level of 5.

Edit: A true skill level doesn't take progress to next level into the calculation, so if you have mining level 8.75 then only 8 is used to get average.